Pensions

Tax Relief on pension contributions

Tax relief available for personal contributions is the higher of £3,600 (gross) or 100% of relevant earnings.

Any contributions in excess of £40,000, whether personal or by the employer, may be subject to income tax on the individual.

The limit may be reduced to £4,000 once money purchase pensions are accessed.

Where the £40,000 limit is not fully used it may be possible to carry the unused amount forward for three years.

The annual allowance is tapered for those with adjusted income over £150,000. For every £2 of income over £150,000 an individual's annual allowance will be reduced by £1, down to a minimum of £10,000.

Employers will obtain tax relief on employer contributions if they are paid and made 'wholly and exclusively' for the purposes of the business. The tax relief for large contributions may be spread over several years.

Pensions automatic enrolment

Auto enrolment places new duties on employers to automatically enrol 'workers' into a work based pension scheme. Employers are required to automatically enrol all 'eligible jobholders' into a qualifying pension scheme and pay pension contributions on their behalf.

Phasing in of contributions

Employer's Staging Date

Minimum Contributions

Employer (%)

Total (%)

To 5 April 2018

1

2

6 April 2018 to 5 April 2019

2

5

6 April 2019 onwards

3

8

Where the employer does not make the total minimum contribution the employee is obliged to pay the balance.

2018/19 (£)

2017/18 (£)

Automatic enrolment earnings threshold

10,000

10,000

Qualifying earnings band - lower limit

6,032

5,876

Qualifying earnings band - upper limit

46,350

45,000

State Pensions

The basic State Pension is a regular payment from the government that an individual may be entitled to when they reach
'State Pension age'.

The basic State Pension depends on the number of years an individual has paid National Insurance or got National Insurance credits, eg while unemployed or claiming certain benefits.

To receive the basic State Pension an individual must have paid or been credited with National Insurance contributions (NIC).

From 2016 the State Pension has been reformed into a new single-tier state pension. In order to benefit from the full amount the individual will need 35 years, rather than the previous 30 years of NIC or credits for the full amount, with pro-rating where 35 years is not achieved. You will usually need 10 qualifying years to get any new State Pension. The amount an individual receives can be higher or lower depending on their National Insurance record. It will only be higher if you have over a certain amount of Additional State Pension.

Currently an individual may also be entitled to the Additional State Pension. How much an individual gets depends on the number of qualifying years of NIC, the amount of earnings and whether the individual has been contracted out of the scheme.

As a new start up business over a year ago I have felt that Clearview Accountancy have been supportive and because of their reassurances it has given me the confidence to realise my ambition as a C.A.D designer. The deciding factor for me was trust, the team at Clearview do what is right for my business and are professional and always approachable. Clearview are helping me develop my business and with our good working relationship I know it will flourish. You get what it says on the tin (as the saying goes)..! Clearview always go the extra mile and that is encouraging for any business

David Thomas, C.A.D Designer

Clearview Accountancy are great, they have fab team that are happy to help in any way they can. They are loyal, approachable and eager. They are always at the other end of the phone or via email. We have gone from a small business to a healthy thriving business and Clearview have helped us grow in the way that we felt comfortable taking risks financially. We have definitely become a better business with the help of Clearview Accountancy